There are such high hopes at the start of a new year. Resolutions are made along with the determination to make this the year you really stick to them. One of the most popular resolutions is to improve your financial health. That usually comes with a plan to pay off debt faster and to save more. The problem is most consumers don't know where to begin.
We suggest starting with these three tips:
Become more financially literate. A recent S&P Global FinLit Survey shows that 43% of Americans were unable to answer five basic multiple-choice questions correctly about general financial matters. Don't fall into that category. "If people understand basic concepts when it comes to saving, investing and interest, then they are more likely to build their nest egg over time. Knowledge truly is power," states Stanton Davis with Avadian Credit Union.
- Pay off one debt at a time. There are two thought methods here. Either start with your most expensive debt (the one with the highest interest rate) and work toward paying it off first or start with your smallest debt (the one with the lowest balance) and knock it out so you feel accomplished sooner. You can also consider moving all of your debt to one low-rate loan or credit card. You have one rate to keep up with, one bill to pay and one goal to meet.
- Automate your savings. With every paycheck you get, set aside a designated amount (no amount is too small or too large) to go directly to your savings account. By paying yourself first, you are eliminating the risk of spending any extra money you have left over after paying bills for the month. Get in this habit and watch your wealth gradually build.
"There are so many tips out there on how to improve your finances. Ultimately these are three fundamental tips every consumer should tackle first if they want to make the biggest impact on their finances," states Davis.